Use the following information to solve #27 and #28:

The B.B Lean Company has $28 million equity and $4,650,000 debt. The stock currently sells for $20 per share. The firm debt is currently priced to yield (YTM) 11%. The risk free rate is 8% and the market risk premium is 7%. You have estimated that Lean has a beta of 0.74. If the corporate tax rate is 34%.

(#27): What is the WACC of Lean Company?

A- WACC = 12.4%.

B-WACC = 14.2%

C-WACC = 13.5%

D-WACC = 17%

(#28): What is the fair value of the common stock, if the growth rate is 5% and the expected dividend is $5?

A- 67.56

B- 6.56

C- 7.43

D- 5.54